Does the Gates’ Letter 2017 answer Warren Buffett’s questions?

Melinda and Bill Gates have made an annual tradition of publishing their thoughts on their work in global development, the challenges they face, and their goals for the future. These letters are a manifesto for their philanthropic work, most of which is channelled through the Bill and Melinda Gates Foundation.

The Gates structured their 2017 Annual Letter as a response to Warren Buffet’s (CEO of Berkshire Hathaway Inc.) letter to Melinda and Bill Gates, where he asked them to reflect on their work so far – on what had gone well, and what hadn’t; and to describe their goals for the future. He further said:

There are many who want to know where you’ve come from, where you’re heading and why. I also believe it’s important that people better understand why success in philanthropy is measured differently from success in business or government. Your letter might explain how the two of you measure yourselves and how you would like the final scorecard to read.

Buffet’s questions assume great significance given that in 2006, he pledged to donate 85% of his wealth to charity, and allotted a sum of about $31 billion to the Gates Foundation. These questions, from one of the most successful investor of our times, are essentially about how well his philanthropic investment in the Gates Foundation was doing. What had he helped them achieve?

In this column, I analyse Gates’ response, and examine whether they really answer Buffet’s questions. I came away with two main impressions: one, their answer as to what success looks like for the Gates Foundation (bulked up by Buffet’s sizeable contribution) is not convincing enough; and two, their response reveals a continuing faith in the role of technology, at the expense of behaviour, institutions, and politics.

The Gates letter focuses on global health, and they lay out a set of impressive numbers: globally, a consistent reduction in mortality rates amongst children under-five have led to 122 million children’s lives being saved since 1990. They talk about the vital role of vaccines, safe deliveries and better nutrition in making that number possible. A consistent theme here is the emphasis on cutting-edge research to develop technical fixes (vaccines, contraceptives, etc.), and helping poor people around the world improve access to these inputs (commodities).

In the 2016 letter, Melinda Gates wrote about women and unpaid domestic work – a complex socio-political issue that has no obvious technical fixes. She reflected on how women spend more time on unpaid domestic work than men do; and partly as a result, they make up a less than half of the organised labour force. That theme carries to this year’s letter as they write about the importance of empowering women by expanding economic opportunities, and their ability to make decisions, especially exercising their reproductive rights.

The 2017 letter also has plenty of the Gates’ trademark optimism that progress is inevitable, and they conclude with promises to continue working towards tackling the most pressing challenges in global health.

As I read the letter, I was conscious of the mega-complex of aid that the Gates have built, with powerful partnerships all around the world. And then, I wondered: with the global scale and scope of investments that the Gates Foundation makes, how would they really measure impact that is attributable to them? When asked to measure themselves, as Buffett did, the Gates talk pick issues closest to their heart, and report all progress made globally.

‘Attribution’ in this case is not quite how we understand it for discrete projects, or multi-input programmes, where a rigorous impact evaluation would suffice. But in order to properly answer Warren Buffet’s question, the Gates would have to demonstrate an improvement over the counterfactual: that they used the wealth bequeathed to their Foundation in ways that enabled a greater number of people to emerge from poverty than would have been in the normal course of events. This could be achieved by their role influencing global development policy, leveraging their resources to raise even greater funds dedicated to finding solutions to pressing development challenges, and their role in strengthening country governments to deliver essential services. On each of these three topics, the Gates fail to mention what their incremental contribution might be.

In answering Buffet’s questions as they did, the Gates may have been trying to answer another of Buffet’s questions, by explaining how success in philanthropy is measured differently from other sectors, where collaboration between different organisations (as opposed to competition) and contribution (as opposed to attribution) towards the achievement of a common goal, are valued. However, in the absence of a more critical reflection of their incremental contribution, they open themselves up to the familiar critique of aid that there is a tendency to overstate successes and not enough admission of failure.

Finally, there are three words that do not appear at all in this letter – ‘behaviour’, ‘politics’ and ‘institutions’ – that may impact the ‘final scorecard’ that Buffett refers to. The global health issues that the Gates talk about focus on the production and delivery of inputs to poor people. For instance, helping increase ‘usage’ is mentioned often in the discussion on contraceptives, but the need to study, and influence behaviour to expand adoption of these products is never mentioned. It is notable, for instance, that sanitation (a pressing public health problem that kills infants and causes stunting) that can only be fixed by a long-drawn process of behavioural change wasn’t mentioned in this letter.

On the other hand, the absence of ‘politics’ and ‘institutions’, despite of Bill Gates’ references to the ‘role of governments’ in last year’s letter, is quite unsurprising. A passing reference is made to the recent change of government in the US and the UK and the threat to foreign aid, but there is no mention of the fact that their wider politics (and resultant policies) potentially have far-reaching consequences, especially where radical politics has been systematically weakening institutions, both in rich and poor countries. Be it women’s reproductive rights, protection of refugees, migration laws, extractive industries, tax havens, or conflict zones around the world, they have the power to destabilise the current course of global development. These happen to be two stark examples, but they amply demonstrate the importance of geo-politics in determining progress in the developing world.

The 2017 Gates Letter leaves one with mixed feelings. It is fair to say that Warren Buffet’s questions go unanswered, as it remains unclear what the incremental benefits have yielded from his massive donation to the Gates Foundation. At the same time, not focusing harder on ‘behaviour’ indicates a puzzling neglect of the long hard slog certain social and development problems demand. Finally, ignoring ‘politics’ and the performance of ‘institutions’ could be a blind-spot that could undo a lot of the gradual progress made by low-income countries around the globe. That is a scary thought.

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Sir, this is a very profound assessment indeed. I was also extremely disappointed that the Gates’ letter just talked about progress made world-wide as if the Foundation alone was responsible for bringing about the change, and failed to reflect their individual contribution. The letter just reinforced the notion that measuring developmental impact is next to impossible. Developmental professionals world-wide would view this as a missed opportunity to educate the business world that even developmental work can be clearly measured and evaluated.